Lessons from Bayh Dole Act and its relevance to India

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is far more knowledge intensive today than it was a few decades ago. Consequently, reengineering in itself does not sustain development beyond the preliminary levels. In earlier times, it used to take decades to transform a scientific discovery into an industrial application. Scientific enterprise achieves a greater sense of purpose when R&D initiatives are translated into products useful to society. Recent trends have proved that closer interaction between the academy and the industry can foster growth to mutual advantage. Interestingly, the first lessons in this direction came from Japan, which promoted a policy of industry-academy cooperation.

Inspired by the lessons from Japan, it was the Patents and Trademarks Amendments of 1980 in USA [popularly known as Bayh Dole Act] that actually spurred an unprecedented growth in the filing of patents and their subsequent commercialisation. The Bayh Dole Act was implemented chiefly in order to promote the dissemination and commercialisation of inventions arising from government funded university research and improving collaboration between universities and industry.

Impact of Bayh Dole Act

Before the Bayh Dole Act, the US universities were obliged to negotiate the commercialisation of an invention with the government. This often ran into trouble because, unlike the industry, neither the university nor the government had the commercial background for this venture. Further, the terms and procedures for patenting were different for different funding agencies. The complex scenario discouraged industries from approaching the government for transfer of patent rights. Thus only a small part of the seminal research was being commercially exploited. In 1980, the Federal government had about 30,000 patents to its credit but only 5 per cent of these were put to commercial use. One of the main reasons for this neglect was that government had to invest a great deal of money if these patents had to be put to commercial use. However, with the freedom granted to the university to team up with the industry on their own, without the funding agencies breathing down their necks, the bureaucratic path towards commercialisation became quicker and simpler. Further, the Act simplified the procedures of patenting, enabling the universities to own the invention and lay down the licensing terms, making procedures quicker and more transparent.

There is no dearth of data to support the Bayh Dole Act's pro growth impact. Fewer than 250 patents per year were being filed by universities before the enactment. However, in single decade [1993 to 2003] the same universities filed more than 30,000 patents, which amounts to more than 3000 per year. Thus we see that the patent share multiplied by a factor of more than ten after the implementation of the act.

In addition to the quantitative impact, the act also changed the complexion of university research in qualitative terms. The privileges conferred by the act supported the more creative scientists because universities were obliged to share the royalties with inventors. Further, it helped to increase the available funds for creative research because it was required that income from licensing is used to support scientific research or education. Cash rich universities expanded their research with the returns from their own research. Licensing income from university research that was ploughed back into R&D and education crossed $ 1 billion in 2004. It was clearly a win-win strategy.

The act also had built-in safeguards against commercial ambitions going overboard. A certain clause called 'march in rights' allowed the government to intervene whenever there was abuse of the privileges granted under the act. Under the provisions of this clause, government could 'march in' and reign in a defaulter whenever the act subverted public interest.

If you examine the fruits of the Bayh Dole Act, one thing becomes clear, it is the pharmaceutical sector that benefited the maximum from the arrangement. While innovations in physics and mathematics etc take considerable length of time to find a direct application in life, many of the findings of life sciences directly yield useful products. One reason for the phenomenal growth in the biotechnological and pharmaceutical sectors, in contrast with other sectors, is the shorter time lag from invention to implementation.

An impressive list of drugs and biotechnological innovations entered the market through the provisions of the Bayh Dole Act. Vitamin D metabolites from the University of Wisconsin, hepatitis B vaccine from Universties of California, and Washington, synthetic penicillin from Massachusetts Institutes of Technology, Cisplatin and Carboplatin from Michigan State University, Neupogen [filgrastim] from the Memorial Sloan Kettering Cancer Institute, recombinant DNA technology from Stanford University, dorsozolamide for glaucoma from University of Florida etc are but few of these.

The academic institutions in US were given more than 8000 US patents between 1993 and 97. Over 2200 new companies have been formed since the implementation of the act. Of these 330 companies were started in 1997. Economic activity equivalent to $ 30 billion supporting 2,50,000 jobs have been the result of this legislation. More than 1000 products based on the technology transfer have entered the market.

Finding an opportunity in the commercial exploitation of original research, universities began to develop the competency for dealing with the legal expertise to handle a complex patent domain. Technology transfer required the services of teams with diverse skills such as legal, business, finance and science. Universities promptly began to constitute technology transfer offices specially for this purpose and their consortium now plays a significant role in the landscape of entrepreneurial growth. It was typically an American-dream-come true situation.

The commercial success of the Bayh Dole Act is evident from the number of members in the Association of University Technical Managers [AUTM]. Prior to the act, there were only 113 members in the AUTM while it increased to 2178 in 1998. AUTM estimated that their collective contribution to the US economy was about $ 40 billion in 1999.

The success of the Bayh Dole Act has promoted its emulation in several OECD countries. It has been studied and critically evaluated by governments, international bodies, NGOs and academics across the globe. While industries and universities have unanimously praised it, there have been critics, who chiefly targeted its political inconsistencies.

Dark side of Bayh Dole Act

With unprecedented success, clearly quantifiable on all fronts, the Bayh Dole Act continues to receive its fair share of criticism. It has been argued that the economic opportunity offered by the enactment of the Bayh Dole Act also made the universities more greedy and sacrificing esoteric research in favour of commercially viable research. The focus on money, the critics claim, brought about a change in the researchers' agenda. Many successful scientists turned into entrepreneurs, and venture capitalists began to cash in on the genius of scientists for pure economic gain.

The political view in the US has always been that if the taxpayer pays for it, the government owns it. Bayh Dole Act does subvert this genuinely democratic sentiment. Not all the scholars believe that the act always serves the interest of the common man. For instance, the march-in clause has rarely been invoked to punish an opportunistic defaulter.

Ralph Nader, five times presidential candidate in the USA, wrote to the director of NIH in 1999 asking him to invoke the 'march in' orders to seize the opportunity to grant license (patented under the Bayh Dole Act) to WHO for the manufacture of anti-HIV drugs that are so critical for the health of many impoverished nations. The polite reply from Dr Harold Varmus, Director of NIH, offered technical explanations to decline the request. The arguments were perhaps politically convincing but far from morally sound. Dr Varmus defended himself saying that the raw technology for the active pharmaceutical ingredient is not the same thing as the patent for the marketed product. Further, drug pricing, according to Dr Varmus did not come under the purview of the NIH.

Quoted below is an extract from another letter from Ralph Nader to the US secretary of health, written in March 2001

"What is at stake is an important moral and economic issue. The US taxpayers are now asked to fund more than $20 billion in R&D for healthcare annually. These expenditures lead to a plethora of patents and other intellectual property rights, not only for HIV drugs such as the patents on products such as ddI, d4T, ddC, Ziagen, Norvir or Kaletra, but also for many other medicines, diagnostic devices and tests and other inventions. It is morally repugnant for the US government to permit private parties to obtain exclusive rights to market these inventions in South Africa, the Philippines, Brazil, Kenya, Romania and other countries, without provisions to help make these products available to save the lives of poor and middle class people.

The recent announcement by Bristol-Myers Squibb that it will reduce the price for d4T, an HIV drug invented at Yale on a government grant, from ten dollars per day to fifteen cents per day, for some patients in some Africa countries, is a positive step, but it came only after student pressure at Yale, a request by Cipla, an Indian generic drug company, for a compulsory license for the d4T patent in South Africa, and years of criticism from many quarters of the d4T price. The fact that it took so long, and required pressure from so many, in a period when there are 20,000 persons per month dying from AIDS in South Africa alone, shows that our current public policy is broken."

Arguments such as the above do give an opportunity to the critics to rubbish the Bayh Dole Act.

Relevance to IndiaIndia is currently in the grip of a feverish pitch of growth where reengineering alone cannot match its burgeoning technological demands. Original research must grow in proportion to the technological maturity that it now exhibits. Pharmaceutical sector is in greatest need of such breakthroughs. With the product patent pushing up the prices of newer and life-saving drugs, new chemical entities have to emerge in our own soil if the current growth is to be sustained. One possible policy reform could be modelled on the Bayh Dole Act. As we have already seen, the greatest beneficiaries of the Bayh Dole Act have been the pharmaceutical and biotechnological sectors.

In India too, industry-academy partnership has been the buzzword for a number of years but clearly, no policy breakthrough is evident as we see it today. Impact of Indian research continues to decline in the face of unprecedented growth. This paradoxical situation requires to be addressed as soon as possible. Indians have proven their mettle whenever an opportunity has been offered to them. There is no doubting the resourcefulness of Indians, only deficit is in the ambience for creative enterprise. Policies must demolish die-hard hierarchies and foster productive partnerships. There have been initiatives by the DST, which has recently called for proposals from the academia for collaborative projects with the industry in the area of interface areas of organic chemistry - biology - pharmaceuticals. Only time will tell how these initiatives bear fruit. All these notwithstanding, one cannot but see these as feeble attempts in this direction. Much more than calling for proposals would be required to see a programme through. Critics have often complained that the bulk of the research funds goes to prop up a few prestigious institutions. Further, there could be more transparency in the award of research grants.

A gap between policy and programme is inevitable in any democracy. And even the best policies fail at the level of implementation because of a multitude of legal and hierarchical determinants. A major drawback in India is the lack of efficient communication systems. The problem today is more attitudinal than any gap in technology. Decision makers, even among the scientists, continue to rely excessively on secretarial assistance, making them quite inaccessible to the junior scientist. Upward communication has negligible impact in scientific circles and it is not often possible for juniors to talk to their superiors. Bulk of the communication is still through pen and paper, where the electronic mode could not only reduce the procedural lag but also break down obtrusive hierarchy. Telephonic communications compromise on accountability. To sum up, India has to go beyond just policy reforms, it is equally important to revamp the working philosophy of our decision making systems.